Posted At : June 28, 2010 11:51 AM
Although the market is getting hit of late, it still appears that the decline is a normal correction and not the beginning of the end…but we must prepare for both.
A successful test (or two) of the recent lows with a snapback rally on good volume would imply that the rally still has legs. A significant break would signify that a topping pattern is forming. Either way, these “cracks” confirm a more dangerous market going forward, so stay alert.
The market has the three basic ingredients needed to keep pushing higher… for now.
1. Liquidity – There’s tons of money on the sidelines or temporarily in bond funds.
2. Low interest rates – they’re not going higher for a long while.
3. Negative investor sentiment – Individual investors are overwhelmingly convinced that it’s obvious the market is set to plummet. Well, if it’s obvious, it’s obviously wrong!
This is the most difficult market in a generation, right here, right now. As we learned last week, when it falls it will fall hard and fast. The challenge is to participate on the upside, but protect yourself on the downside. It is more critical than ever to be the expert or hire one. That’s where we can help.
We can help you manage risk and deliver returns. If you would like to discuss the market, economy or just get a free second opinion on your portfolio, simply reply back or give me a call.
Regards – Keith Springer, President of Springer Financial Advisors